Monday, July 13, 2015

When
he departed Bell Media at the end of 2013, seemingly closing the book on a
nearly 40-year career in media, Rick Brace admitted he was apprehensive
about being bored when he was no longer responsible for the day-to-day
operations of a major media company.

“When
you go from running flat out to stopping, there’s a real fear that it’s too
quick a transition and that you’re going to be bored,” said Brace at the time.

Brace
was not available for interviews, but said in a release that leading Rogers
Media is “an opportunity I just couldn’t pass up.” His appointment is effective
Aug. 10.

The
veteran media executive cited the company’s collection of assets, the Rogers
3.0 strategy championed by Rogers Communications CEO Guy Laurence, and
the “digital disruption” occurring within media as the primary reasons for
abruptly stepping out of retirement.

Industry
experts said Brace’s considerable sports pedigree, which includes several years
as president of the sports specialty channel TSN, represents a “doubling down”
on sports for Rogers, which in June wrapped up the first year of its 12-year
NHL rights deal.

Solutions
Research Group president Kaan Yigit said Brace’s hire is a clear signal
to stakeholders that Rogers “means business” in sports, particularly after what
he characterized as an inauspicious debut for hockey across its various
properties.

“I
see the NHL contract as priority number one, as well as other sports
properties,” said Yigit. “It’s absolutely essential to deliver more on the NHL
front, as this season delivered below expectations in terms of audience and
growth.”

Yigit
also said Brace’s hire could mean future deals to support the company’s
steadfast commitment to sports.

“I
would not be surprised if there weren’t other deals to support this direction
in the next 18 months,” he said. “And someone like Mr. Brace knows the market,
the players and every stakeholder intimately.”

Bob
Stellick, president of Toronto sports marketing firm Stellick Marketing
Communications, said NHL ratings and revenue could prove a “bit of a challenge”
for Rogers in the near future, but said Brace is a “seasoned” sports media
executive, adept at extracting value from existing properties.

Brace
has 35 years of media experience, much of it spent within sports broadcasting.
He helped found the sports specialty channel TSN, and served as its president
from 1998 to 2000.

Stellick
said Brace is a stark contrast to Pelley.

“Keith’s
a high-energy type of guy, whereas Rick is more of a steady-hand-on-the-tiller
kind of individual,” said Stellick. “That’s more of what [Rogers] needs now:
Someone to digest the properties they’ve purchased and turn them into
profitable entities.”

He
said Brace could make a material difference in the Rogers Media culture,
describing Pelley as “visionary” and “a deal-maker” and Brace as a person
capable of leveraging full value from those deals. “He’s the guy who takes what
someone else has purchased and develops it into the property they need it to
be,” said Stellick.

Rogers,
which owns Marketing, reported an operating loss of $32 million on $464
million in revenue for the first quarter ended March 31. In its analysis, the
company said higher programming and production costs of approximately $120
million – stemming from an increased number of NHL games – contributed to an
anticipated operating loss for hockey of $14 million in the quarter.

Stellick
said Rogers always faced a daunting task in making further inroads with hockey,
because Canadian broadcasters have excelled at bringing the sport to audiences
for decades. He said the idea that Sportsnet could recreate it was aggressive.

Rogers
will release its second-quarter results later this month, but in the most recent quarterly report company officials said
they expect hockey’s seasonal loss to be offset by the higher-value playoff
season, during which it generates greater ad revenue while producing fewer
games.

Veronica
Holmes, president, digital for ZenithOptimedia in Toronto, said Brace
is joining Rogers at a key juncture. “Rogers Media has an impressive set of
assets and is positioned to grow its audiences across broadcast, print and
digital,” said Holmes. “There’s still a big job to do monetizing all their
properties and managing revenue as audiences shift to digital.”

The amusement parks and arcades industry recorded operating revenue of
$465.3 million in 2013. The industry had operating expenses of $438.7 million,
which resulted in an operating profit margin of 5.7%.

Salaries, wages, commissions and benefits were $150.5 million and accounted
for 34.3% of all operating expenses. The next most significant operating
expenses were cost of goods sold (13.3%) and amortization and depreciation
(10.1%).

Other amusement and recreation industries

Operating revenue for the other amusement and recreation industries was
$8.1 billion in 2013. The industry had operating expenses of $7.7 billion,
which resulted in an operating profit margin of 4.9%.

Salaries, wages, commissions and benefits were $2.8 billion and accounted
for 36.3% of all operating expenses. Other operating expenses included cost of
goods sold (10.1%) and rental and leasing (8.6%).

Within this industry group, the fitness and recreational sports centres
industry contributed the most to operating revenue in 2013 with $2.7 billion.
The industry had operating expenses of $2.5 billion, which resulted in an
operating profit margin of 6.5%. Salaries, wages, commissions and benefits were
just over $1 billion, accounting for 40.0% of its operating expenses.

Cool summer weather in Eastern Canada had an effect on the golf industry.
Operating revenue was marginally higher than the operating expenses of $2.5
billion, resulting in a 1.1% operating profit margin. Salaries, wages,
commissions and benefits were $992.5 million, accounting for 39.6% of its
operating expenses.

Skiing facilities had operating revenue of $786.3 million. The industry had
operating expenses of $763.3 million, which resulted in an operating profit
margin of 2.9%. Salaries, wages, commissions and benefits were $287.4 million,
accounting for 37.6% of its operating expenses.

The "all other amusement and recreation industries," which is
composed of marinas, bowling alleys, recreational sports teams, observation
towers and all other related activities, generated operating revenue of $2.1
billion and operating expenses of $1.9 billion, which resulted in a operating
profit margin of 8.3%. Salaries, wages, commissions and benefits were $501.0
million, accounting for 26.3% of its operating expenses.